Millennials have faced more than their share of financial setbacks.
Many graduated into the Great Recession with dismal, and sometimes non-existent, job prospects. Others carry student debt the size of a mortgage. And some are trying in vain to buy their first home in a too-hot housing market.
With many approaching 40, millennials are ready to pass on the best money tips they got over the last decade onto the generation to follow them: Gen Z.
Their top five financial tips — based on a survey from New York Life — is simple but effective for building financial security, says Brian Madgett, head of consumer education at New York Life.
“What I see is building the financial basics,” he says. “These really lay the foundation for everything else in your life to happen.”
Tip 1: Don’t live beyond your means.
The first tip is easier said than done, given recent increases in college tuition, health care, and housing costs — both rent and home prices.
But staying within your income is essential to being able to save for longer-term goals, and 78% of millennials said this tip had the biggest impact on their financial lives.
Allot a certain percentage of your income for specific categories, starting with necessities first. Also, resist the temptation to turn to credit cards for more fun things, like vacations, that you can’t afford upfront.
“The happiest people on vacation and the ones who planned, budgeted and saved for it before they went on vacation,” Madgett says.
Tip 2: Build a budget and stick to it as strictly as possible.
Almost three-quarters of millennials said this tip had the biggest impact on them. Thomas Blake is taking it to heart.
The 22-year-old Gen Zer from Toronto sits down every week, pulls out all his receipts and inputs the money he’s spent into an Excel spreadsheet.
It’s more rudimentary than many budgeting and tracking apps available, but the digital ad manager says the simple act of recording it manually helps him control his spending.
“There’s something shameful for getting a receipt back on something you shouldn’t have spent money on and then again when you have to put it in the spreadsheet,” he says. “It really makes you pause and think: ‘How will I feel about this a week later when I input it.”
His budget also gives him a good idea of where his money goes and where he needs to cut back. Before, he just guessed how much he spent on certain categories like going out.
“The assumptions I made about my spending were way off by as much as 40% to 50%,” Blake says.
Tip 3: Build an emergency fund.
All it takes is one unforeseen event to derail your finances, especially if you have nothing saved for that rainy day. And emergencies aren’t rare, either, says Riana O’Keefe, a 35-year-old substitute teacher in Des Moines, Iowa.
“In the last five years, we have saved and spent $10,000 from our emergency fund three times,” the millennial says. She used the cash for emergency surgery for her cat after it ate a hair tie. Another time was to replace car shocks.
“When all these things happen in one month, it becomes hard,” she says. “Your car will break. Your pets will eat things they aren’t supposed to, and so will your kids.”
That’s why almost two-thirds of millennials said this is their top money advice.
The goal is to save up at least six months’ worth of your necessary expenses. That’s a lot and can be daunting. So focus on starting small and get enough in your checking and savings account that could cover a small unexpected problem.
Tip 4: Resist lifestyle creep.
Getting a raise or bonus can feel like birthday money. But instead of blowing the extra cash and living the high life, bank some of it — not necessarily all of it — for a rainy day or to pay off debt.
According to the New York Life survey, nearly two in three millennials said to save some of your raise, rather than build it into your lifestyle.
Consider a 10% raise.
“That’s a really big raise, but you’d probably be equally excited if you got a 5% raise,” Madgett says. So you could take half for savings, and give yourself permission to spend the rest.
Tip 5: Pay off your credit card balance each month.
If you don’t live beyond your means, stick to a budget and can resist lifestyle creep, you can easily pay off your credit card balance each month. If you don’t, you end up paying interest and the night-out that cost you $100 at the time is now 17% more expensive.
Paying it off has a huge impact, according to 62% of millennials in the survey.
O’Keefe doesn’t often use credit cards anymore, but when she does, she’s adamant about paying the entire bill. That’s because she’s still smarting from mistakes she made almost a decade before.
“I’m still carrying credit card debt from when I was 26,” she says.
Janna is an editor for Yahoo Finance. Follow her on Twitter @JannaHerron.